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CNBC – US Could Be the Next Greece—in 2037: CBO Report
For all of the hemming and hawing about spending cuts in Washington, the Congressional Budget Office’s latest long-term budget forecast reflects two painful facts for Washington: How large the nation’s problems remain, and how the GOP’s 2010 surge into Washington has had only a limited impact in changing America’s fiscal trajectory. The annual report, released on Tuesday by Capitol Hill’s nonpartisan budget umpires, argues that if Congress’s current policies continue – meaning that the Bush tax cuts are renewed at year’s end and Medicare providers don’t face drastic reductions in payments, among other issues – federal debt held by the public will reach 93 percent of gross-domestic product (GDP) by the year 2022. That’s down about seven percentage points from CBO’s 2011 forecast, which saw the nation’s debt as a share of GDP rising to 100 percent by 2021. That’s thanks in large part to the Budget Control Act of last summer – also known as the debt-ceiling deal – where Congress achieved more than $2 trillion in savings over the next decade through a combination of spending cuts and discretionary spending caps.
AFP – Congressional study warns of dire US debt outlook
US debt is on track to grow to twice the size of the entire economy in the next 25 years, the non-partisan Congressional Budget Office reported Tuesday in its grim view of America’s fiscal future. The CBO said that under present policy, in which current tax rates are upheld and lawmakers do not curb entitlements, the portion of national debt held by the public would soar from 70 percent of GDP as forecast for the end of 2012 to 100 percent of GDP in just over a decade. “After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels,” the CBO said in its 2012 Long-term Budget Outlook. “Debt as a share of GDP would exceed its historical peak of 109 percent by 2026, and it would approach 200 percent in 2037.”The campaign of Mitt Romney, the Republican challenging President Barack Obama for the White House in November’s election, said the dire data confirmed the administration was taking the country down a “path to fiscal ruin.”Democrats countered that it showed that revenue generation, and not just cuts to domestic spending, must be part of any broad plan to rein in debt.The economy is facing historic pressure in coming decades due to the aging of the US population: the demands of the large “baby-boom” generation — those born between the end of World War II and the early 1960s — will lead to a significant sustained increase in the share of people receiving benefits such as Social Security and Medicare.
Source: Bianco Research
Category: Credit, Think Tank
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Recently outlays for war have equalled or exceeded outlays for social security. War is not as important as social security. No one is willing to pay for perpetual war profiteering, there is no dedicated tax for war.
Limit perpetual war to 1.6% GDP, about a third of the current burden.
Federal debt was developed since the 1970′s when US went off Bretton Woods. A large part of it was spending for perpetual war, for example the US navy is debating whether to buy small multi billion dollars stealth “destroyer” ships or bigger cruiser type cruiser ships, all to be the dreadnaughts which worried Alfred Thayer Mahan when the Royal Navy had the market in dreadnaughts to bombard the shores of the low cost suppliers (US, 1880).
Since 1951 US has wasted a major part of $25,000B in 2010 money for perpetual war and sociailized profits/jobs building shoddy weapons to forestall another Pearl Harbor when noone else in the world has aircraft carriers nor is dumb enough to fight WW II again (see Korea and Vietnam, high tech war against goatherds).
Anyone who worries the deficit but thinks that spending 4% of GDP for refighting WW II with socialized inept weapons is a con artist. The only problem they are solving is the problem of the New Deal taking care of the 99%.
Start to cut the deficit. Killing F-35 will reduce deficits by 1510B over the next 20 years, killing DD 1000 will save $3B a ship, plus another 7B steaming each ship around the world creating wake and wasting the US economy, DD 1000′s main job is to sneak up on Shanghai and lay in EM rail gun fictitious artillery on IC factories, there goes iPad 10.
And put the Zumwalt, the cruiser size version of the DD 1000 to rest for good.
And maritime radars to cue star wars missile that abort on demand……….
Regarding cnbc… ‘… , and how the GOP’s 2010 surge into Washington has had only a limited impact in changing America’s fiscal trajectory. The annual report, released on Tuesday by Capitol Hill’s nonpartisan budget umpires, argues that if Congress’s current policies continue – meaning that the Bush tax cuts are renewed at year’s end…”
Why can’t any GOP voters put those two together…. that the GOP is the problem with their crazed stance on to marginal rates? Obama was going to give them huge cuts in entitlements if they had agreed to raising marginal rates… imagine where the defifict wold be heading if the GOP had agreed?
Great in fantasy land but in reality, war is the best generator of sustained growth there is which is why we are always in at least one war. Not saying I like this but as long as our monetary system is debt based, meaning growth is by definition linked with an increase in the money supply, endless wars are with is for the forseeable future. It is the only way the credit ponzi can be perpetuated.
MayorQ,
“[W]ar is the best generator of sustained growth there is” for a connected few ……. except for anything that does something for the productive side of the US economy.
You are no match to Ike, he was quite a military adminsitrator as you may have heard, who said every dime spent on weapons is stolen from better uses in the economy, in 1953.
Military industry congress complex (MICC) is welfare for a few. Been welfare since at least the 60′s when US Sen. Wm. Proxmire gave out the annual golden fleece awards. I was just starting out in my role in the MICC.
Taking resources away from other uses to blow things up in Afghanistan and Pakistan or to keep China from butting the Phillipine government arouind in international waters is a huge harmful burden. The only reason to accept that burden and its opportunity cost is for real threats to the common defense, which do not exist, despite the fiction running around the MICC.
I was in the war business for all the years of my career, as military officer, as a civilian employee, as a contractor both in “services” to my old job in acquiring military stuff and in working to design and deliver military stuff to my old job.
Investing in blowing things up was very good for me, as it turned out. I took a little less pay in my working life until I retired from civil service and began double dipping.
The technology I worked on had to be “baby sat” through tests and there were no failures despite the numbers, there were waivers, deviations and the policy was a “requirement” on contract was always passed despite it not being proven or not the feature being tested. GAO reports every year that my experience are common among the $1.6T in big system currently being compromised to send that money to the connected few.
See how F-22 is poisoning its pilots not recognized until all 183 of the planes had been delivered. Just one of many examples.
Things are put into production to make money for the compnay, not to deliver a usable weapon. Then the “fixes” are made and the stuff which did not work is taken out of service to try and make it work. All the time the tax payer borrows top dollar to pay the bill with abundant overhead and safe profits guaranteed.
It is wasting about 3% of GDP ot the 5% or so a year, and cutting it by two thirds might get rid of the useless. Unless the MICC welfare is running it.
Next Greece? Worst post ever. The US can pay off its ‘debt’ anytime it wants. Greece can’t. Until people get that, give it up and move on from these types of posts.
Without this debt, capitalism would be dead.
Too much debt obviously is not good, and should have been reined in some time ago but unfortunately has not transpired due to numerous reasons, the biggest probably being proscrastination.
A Republican President, Dwight D. Eisenhower in his exit speech on Jan. 17, 1961 warned of the “military industrial complex” (abbrev. vers.): http://www.youtube.com/watch?v=8y06NSBBRtY
With that said, CNBC comparing Greece to the U. S. is like comparing apples to oranges. Greece is a currency user and the U. S. on the other hand is a currency issuer and user. Comparing a State here in the U. S. to Greece would be more appropriate, as the states here in the U. S. are only currency users and cannot issue currency, nor can Greece.
Your chart of “the” federal deficit perpetuates inaccurate information. What is presented as “THE” deficit is actually the total of two numbers: (1) the “on-budget” (ie, CONGRESS) deficit, and (2) the “off-budget” (ie, SOCIAL SECURITY) “surplus”. Social Security is supposed to be OFF the budget, but it is nevertheless put into the total, to make Congress look better than it really is doing.
Congress runs perpetual (“on-budget) deficits of its own, but then “borrows” (or more accurately, embezzles) any cash remaining in the Social Security account, spends it, and calls it “income”, which it therefore subtracts from its own real deficit, before reporting the total (of its own deficit + the Social Security “surplus”) as THE deficit.
The total of what Congress embezzles from our nation’s retirement fund over the years is called “The trust fund”, meaning that this amount (now about $2.8 trillion) is what has been called “income” by Congress, but which is the amount by which Social Security has taken money taken for Congressional spending. And of course, Congress, on-budget, with deficits over $1.3 trillion per year for each of the last 4 years and for the foreseeable future, has no way to ever pay Social Security back. Also, because the phony government accounting calls all of this “borrowing” that Congress is doing, Congress has to pay “interest” to Social Security. Of course, it can’t pay SS, so Congress in effect says to SS: ” We don’t have the cash, but please record a Note Receivable on your books, so you can call it “income” and we will record a Note Payable over here in Congress. That way it will look as if Social Security has income, when IN FACT SOCIAL SECURITY DOESN’T HAVE ENOUGH CASH INFLOW ALREADY, RIGHT NOW, TO COVER ALL ITS OBLIGATIONS TO WRITE RETIREES’ CHECKS, even if it is showing “income” from Congress.
The “on-budget” (Congressional) budgets are actually far worse than what your chart shows, but you have been conned as the government intended.
I hate to have to state the obvious…. but Social Security has continued and unlimited funding unless/until Congress changes the laws relating to eligibility and disbursement. Social Security is not dependent on “cash inflow” in any way.
We are fools. Look at the way we are talking about this stuff . . . ‘unlimited funding’ . . . we can pay off our 100% of GDP debt any time we want . . . blaming war for these massive deficits (and failures by this administration to pass a single budget!). We are blowing it for our children and grandchildren. As a 40-something, I wish our ‘leaders’ would tackle the tough issue – social security. I’d rather Congress tell me I can’t retire until 70 than have to live in a bankrupt country. It isn’t rock science but it does require someone to tell the truth!
Oh, and once we get the Social Security issue dealt with, let’s not be complete idiots and pile more unfunded obligations (Obamacare) on top of our heap of debt. Let’s wake up folks.